Area enjoying big boom in poultry house construction

Staff Writer

(March 3, 2015) Poultry house construction across the Delmarva region has increased dramatically over the last year, driven by boosted incentives for growers, among other factors, industry representatives said last week.
Several poultry companies and lenders declined to get specific about how many new poultry houses they’re behind, either through bonuses or loans, but most parties agreed: It’s the best time in recent memory to expand poultry operations.
“They can’t build them fast enough,” said Don White, housing coordinator at Amick Farms, a Maryland chicken processor.
Kurt Fuchs, president of The Delmarva Poultry Industry, Inc. also noted the growth at a meeting of agriculture officials before Maryland’s House Environment & Transportation Committee on Feb. 5.
A shortage of construction crews across the region has limited the industry’s expansion, which could help it from ultimately over-expanding, said Charlie Carpenter, vice chairman of the Maryland Agricultural Commission, at the group’s Feb. 11 meeting.
Falling grain prices are also pushing farmers to expand or start poultry operations, said Fuchs and Kenny Bounds, senior vice president at MidAtlantic Farm Credit, one of the largest agriculture lenders in the nation. Many growers are attracted to the security of the industry’s contract system, which guarantees income, Fuchs said.
“I think a lot of the farmers have seen the bubble has burst on grain prices, and they’re looking for a second source of income,” White said.
Processing companies, such as Perdue and Tyson, have also increased bonuses for new house construction. Bonuses have been standard within the chicken industry for roughly a decade.
A year ago, Amick Farms offered growers a $15,000 bonus to build an average 60-foot by 560-foot poultry house, White said. About 10 months ago, that bonus check jumped to $45,000.
“It’s a game changer,” Bounds said. “We’ve seen a dramatic increase in new poultry house applications in the last year. … [The bonus] provides some liquidity and helps them get off on a solid financial footing. … Generally, the houses will pay for themselves and return around — depending on the size of the house — about $20,000 a year over and above payment.”
Although Perdue continues to build houses with growers, the company is mostly replacing homes that fell into disrepair during the recession or finding new growers to replacing retiring growers, said Julie DeYoung, a company spokesperson.
“We’re not increasing or expanding the total number of houses,” she said.
A February USDA report projected U.S. broiler chicken production to expand 3.5 percent from about 38.6 billion pounds in 2014 to about 40 billion pounds this year.
The same can’t be said for house construction bonuses, however.
“Believe me, [increases] have probably flattened out,” White said. “I don’t see it going any higher.”